All 21 heads of federal public service departments will be on salaries of at least $650,000 by 2014.
The salary package of the most senior public servant, the head of the Department of the Prime Minister and Cabinet, will increase by more than $200,000 before July 1, 2014, from $620,000 to $825,000.
The Remuneration Tribunal has also awarded a $180,000 boost to the salary of the secretary of the Treasury over that same period from $615,000 to $805,000.
The national secretary of the Community and Public Sector Union, Nadine Flood, said that there was "no doubt that agency heads do complex jobs and should be paid appropriately".
"However, for the thousands of Australian public service staff who earn, on average, less than $60,000 a year and are facing yet another round of job losses and budget cuts, these increases seem a bit rich," Ms Flood said.
She said frontline staff felt they were "copping the brunt of the cuts while agency heads get the big rewards. It's pretty clear different standards apply to public service chiefs and their staff".
The independent tribunal's decision on the pay packets of public service heads also opens up a big gulf between the pay of the heads of the biggest departments - such as Treasury, defence and foreign affairs - and the heads of other departments such as communications, immigration and the Attorney-General's Department.
There is now a difference of $50,000 between the salary package of the head of the Prime Minister's Department and the head of one of the departments in the lowest pay bracket. But by July 2014 the difference will be $175,000.
A departmental head's base salary is now 72 per cent of their package. This will drop to 70 per cent in 2014, the difference made up by superannuation, vehicle allowances and travel entitlements. Because of budget cuts, many departments no longer pay their top bureaucrats a bonus.
"We are not seeing a consistent approach across the top levels of the public service," Ms Flood said.
The pay of public service chiefs puts them in the league of the heads of large private companies.
The head of the Australia Institute, Richard Denniss, said it now took public service chiefs less than 10 days to earn the amount of money a recipient of unemployment payments now earned in a year.
"No one is suggesting that we don't need highly capable people at the top of the public service but there's no evidence that paying departmental secretaries more than $500,000 per year is going to make them work harder or smarter," he said.
$620K Base salary: $446K
Total package value, Head of Department of Prime Minister and Cabinet
$481K
Prime Minister
$256K
Average salary of the top five executives* of the 100 biggest companies in Australia
$69K
Average full-time adult ordinary earnings
* Except chief executives.
Figures are rounded
Frequently Asked Questions about this Article…
What salary increases were awarded to federal public service department heads?
The Remuneration Tribunal has boosted pay for Australia’s department heads so that all 21 will be on packages of at least $650,000 by 2014. For example, the head of the Department of the Prime Minister and Cabinet was moved from $620,000 to $825,000, and the secretary of the Treasury was lifted from $615,000 to $805,000.
Who set these public service pay rises and why does it matter for investors?
An independent Remuneration Tribunal determined the increases. For everyday investors, tribunal decisions matter because bigger public wages affect government budgets, departmental morale and public debate about spending priorities — all of which can influence policy and economic sentiment.
How do these top-end public service salaries compare with average public servants’ pay?
The article notes a stark contrast: frontline public servants earn, on average, less than $60,000 a year while department heads will be earning $650,000 or more by 2014, highlighting a large internal pay gap within the public service.
Why are the new salary packages controversial?
Critics — including union leaders quoted in the article — say the rises are hard to justify when many frontline staff face job losses and budget cuts. The increases widen pay differences between senior leaders and ordinary public servants and have prompted concerns about fairness and inconsistent treatment across departments.
How big is the pay gap between the highest-paid and lower-paid department heads?
According to the article, there is presently about a $50,000 difference between the head of the Prime Minister’s Department and heads in the lowest pay bracket; that gap is set to widen to roughly $175,000 by July 2014.
What makes up a departmental head’s salary package?
A head’s salary package is made up of base salary plus superannuation, vehicle allowances and travel entitlements. The base salary currently represents about 72% of the package and is expected to fall to about 70% in 2014. The article also notes many departments have stopped paying bonuses because of budget cuts.
Do these public service chief salaries compare with private sector pay?
Yes. The article says the pay of public service chiefs places them in the same league as heads of large private companies, underscoring how senior public servants’ compensation now resembles top private-sector executive pay.
What wider social or economic comparisons were made about the new public service pay levels?
Richard Denniss of the Australia Institute is quoted saying senior public servants now earn in less than 10 days what an unemployment payments recipient gets in a year. He also argued there’s no evidence paying departmental secretaries more than $500,000 a year will make them work harder or smarter — a comment framing the debate in social and effectiveness terms.
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